The NZ Herald today reports on the CBD rail tunnel business case, giving a particular focus to Steven Joyce’s very disappointing response to it. Over recent months it had seemed as though Joyce has warmed to the project, often describing it as something that did seem to ‘stack up’. But I really do need to wonder how genuine he has actually been with regards to the CBD Rail Tunnel. It seems like his comments reported in today’s paper perhaps highlight his true feelings:
But Transport Minister Steven Joyce says a report from a $5 million study commissioned by KiwiRail and the former Auckland Regional Transport Authority raises many questions to be worked through before the Government can consider contributing to such a costly endeavour…
…But Mr Joyce last night described the inclusion of transformational benefits to calculate a return of $3.50c for each dollar invested as “webs [wider economic benefits] on steroids” and said it was the first time he had seen such an approach in a business case.
He said an estimated $1.99 billion cost for the tunnel did not include $340 million for extra tracks and trains needed to run through it, making a total of $2.3 billion.
“It would be the biggest thing that would suck up all the money in Auckland for quite some time.”
The frustrating thing is that he’s just plain wrong on all the excuses he’s now using to delay his support of the project.
Under the summary of capital costs it’s clearly shown that $240 million has been dedicated to the purchase of 24 new three car EMUs. The study has clearly compared the economic efficiency of two options – the base option which includes the $240 million spent on additional rolling stock or a more ‘bare basics option’ which includes only a small amount spent on extra rolling stock. The graph below shows that the cost-effectiveness of both options is the same:
On the other matter, that this is supposedly the first project to use the urban regeneration benefits that he unfairly calls “WEBs on steroids” – once again he is clearly wrong. The recent report undertaken by SAHA international to peer review the cost-effectiveness of the various Roads of National Significance looked at this very issue – and undertook a number of studies to analyse various types of wider economic benefits, including induced employment growth, which is what the CBD Rail Tunnel business case looks at.
To illustrate this point, I’ve taken the graph from SAHA’s report that highlights the level of various benefits from the seven roads of national significance and inserted the transport (green), basic wider-economic (purple) and ‘employment’ (blue) benefits that the CBD Rail Tunnel will provide. My figures have come from page 5 of the business case’s executive summary: (It is probably necessary for me to note that the reason Victoria Park Tunnel doesn’t have wider-economic benefits is not because they don’t exist, but rather because its funding was approved without looking at these benefits – therefore they’ve never been calculated).
I must say I really did think Steven Joyce was coming around to supporting the CBD Rail Tunnel project. It’s very disappointing that he’s now dismissing it based on matters that aren’t even true – particularly when he has a business case in front of him that spells out a compelling economic argument for proceeding with the project. I thought the government wanted to boost the country’s productivity and international economic competitiveness?